For more stories like this, sign up for the PLANADVISERdash daily newsletter.
Data & Research August 6, 2015
ICI Savings Snapshot Shows Individual Commitment
Large data set reveals U.S. workers are engaged in their DC plans and are taking their individual responsibility for saving seriously.
Reported by John Manganaro
A snapshot of the savings behavior of some 26 million U.S. retirement plan participants clearly shows Americans’ continuing commitment to saving for retirement, according to the Investment Company Institute (ICI).
A new study from ICI, “Defined Contribution Plan Participants’ Activities, First Quarter 2015,” includes data from January through March 2015 and is based on actual defined contribution (DC) plan recordkeeper data. ICI says the study demonstrates that participants are continuing to save at a steady pace in DC plans provided by their employer during the quarter.
The data set shows just one in 100 participants stopped contributing in the first quarter of 2015, the same pace as in the first quarter of 2014. Even better, participants generally did not tap into their accounts—as DC plan withdrawals in the first quarter of 2015 remained low and were in line with the prior year’s first quarter activity.
“Only 1.3% of DC plan participants took withdrawals in the first quarter of 2015,” ICI notes, also the same share as in the first quarter of 2014. “Only 0.4% took hardship withdrawals during the first quarter of 2015, compared with 0.5% during the first quarter of 2014.”
NEXT: Loan activity looks positive
ICI finds DC account loan activity edged down in the first quarter of 2015, “following a seasonal pattern observed over the past several years.” As ICI explains, the first quarter of the year tends to have lower percentages of DC plan participants with loans outstanding compared with later quarters. “The data show that at the end of March 2015, 17.4% of DC plan participants had loans outstanding,” ICI explains, “compared with 17.9% at year-end 2014.”
Another positive development in the quarter had to do with participant behaviors: ICI observes stock values “edged up” during the first three months of the year, but most DC plan participants stayed the course in their asset allocations—considering long-term goals ahead of short term market moves.
Although some allocation readjustment is healthy, of course, the study notes 4.3% of DC plan participants changed the asset allocation of their account balances between January and March. Another 4.2% changed the asset allocation of their contributions. ICI says these levels of reallocation activity are in line with the activity observed in the same time frame a year earlier.
Additional findings from the first-quarter report are available here.